Staples Reports Profit, Sales Decline
November 18 2015 - 8:20AM
Dow Jones News
Staples Inc., which is awaiting regulatory approval for its
acquisition of rival Office Depot Inc., on Wednesday said profit
slipped in its latest quarter as sales remained under pressure.
The Framingham, Mass., company in February bid $6.3 billion to
buy its smaller rival. Amid concerns that the proposed tie-up would
leave few competitive options for large businesses that buy office
supplies in bulk, the Federal Trade Commission has spent about 10
months scrutinizing the deal.
The companies have reportedly offered to transfer a chunk of
their large corporate contracts to wholesaler Essendant Inc. to
allay antitrust worries, on top of the $1.25 billion of annual
Office Depot business Staples has agreed to divest.
The proposed transaction—which would result in combined sales of
about $40 billion—comes as the retailers face dwindling sales amid
growing online competition from retailers like Amazon.com Inc.
Staples warned in August that it would report lower sales in the
third quarter, which covers much of the back-to-school sales
season.
On Wednesday, the company said it expected another sales decline
in the fourth quarter.
During the most recent period, sales fell 6.2% from a year
earlier, with comparable-store sales in North America down 2% on
lower traffic and total international sales 17% lower than the
year-ago quarter.
Store closures shaved about 3% from the top line, and a stronger
dollar took off another 4%, Staples said in a news release.
In all, Staples reported a profit of $198 million, or 31 cents a
share, down from $216.8 million, or 34 cents a share, a year
earlier. Excluding merger and restructuring costs, earnings per
share fell to 35 cents from 37 cents.
Revenue decreased 6.2% to $5.59 billion.
Analysts projected 35 cents in adjusted per-share profit on
$5.66 billion in sales, according to Thomson Reuters.
For the current quarter, the company said it expects to report
adjusted earnings per share of 26 cents to 30 cents, bracketing the
average analyst estimate of 28 cents. The company didn't indicate
by how much sales would fall in the fourth quarter.
Under a current timing agreement between the FTC and the two
companies, the commission is scheduled to render a decision on the
merger by Dec. 8, though that date could be pushed back. Antitrust
regulators in Europe have meanwhile amped up their probe and in
September extended their decision deadline until early March.
Amid concerns that the deal won't pass muster, Staples shares
have dropped 31% this year while Office Depot's stock has fallen
15% and is trading at a sharp discount to the deal price.
In premarket trading, Staples shares declined 3% to $12.07.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 18, 2015 08:05 ET (13:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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